House flipping dollar volume hits 11-year high

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Financing poured into purchasing homes to flip in 2018, reaching the highest total since 2007, according to Attom Data Solutions.

The total dollar volume amassed $19.9 billion for homes flipped in 2018, up 8% from 2017's $18.5 billion. HGTV's growing cultural footprint of home renovation and flipping shows surely helped spark interest during a downtime in overall mortgage lending.

Despite the high dollar volume, the number of single-family homes and condos flipped in 2018 fell 4% year-over-year, going to 207,957 from the 216,537. The total flips were 5.6% of all single-family home and condo sales in 2018, remaining static from 2017.

"With mortgage rates remaining strong and people staying in their homes longer, we have started to see a bit of a flipping rate slowdown," Todd Teta, chief product officer at Attom, said in a press release. "However, this isn’t to say home flipping is going away. The market is still ripe with investors flipping and bargains still await, especially in the lowest-priced areas of the country, where levels of financial distress remain highest."

The average return on a house flip in 2018 was $65,000, down 3% from $66,900 from 2017 and marked a seven-year low. The fourth quarter's $62,000 gross profit of 41.9% also represented a quarter-over-quarter drop from 42.9%.

The highest ROIs in 2018 came from metros in the mid-Atlantic crossing into the onset of the Midwest. Pittsburgh had the highest average profits at 144.2%, followed by Scranton, Pa., at 131.7%, Atlantic City, N.J., at 113.2%, Cleveland at 112.1% and Erie, Pa., at 109.3%.

Memphis, Tenn., led all housing markets with the year's highest flipping rate of 11.7%. Phoenix was second at 9.1% and Las Vegas was third with 8.7%. Boston saw the largest annual jump in flip rate, going up 33.3%. Tucson, Ariz., followed with a 27.3% gain and Raleigh, N.C., was next with a 24.5% increase.

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Purchase Real estate Housing market Mortgage rates Distressed Attom Data Solutions